Day 14: Contract

Chris calls Day 14 “Set Up a Way to Get Paid.” This chapter
covers selecting a payment system, creating invoices, and using simple
contracts. For your contract, he says you only need to specify what you’ll do,
how much you’ll get paid, when you’ll get paid, and “any protections you
require.” Chris also says that that you can communicate all of this via email
without needing a separate agreement document.

<cringe><shudder>

While Chris is technically right, I would never advise a
client to operate their business this way. This is the type of contract that
works when nothing goes wrong; however, contracts exist to save you in two
situations:

When there’s confusion about the parties’ obligations, and

When there’s a problem or dispute.

Always Have a
Separate Written Contract

If there is situation where lawyers are needed to resolve a
dispute, the first thing I ask my client is “Where’s your contract?” If it’s a
series of emails, and perhaps some text messages, and phone calls or
conversations you claim occurred, the first part of my job will be compiling
the terms of the agreement.

When there’s a single agreement, all the terms are in one
place. And when the contract requires that all changes must be in writing and
signed by both parties, it minimizes the risk of confusion or a he-said-she-said
situation.

When you don’t have the terms of the contract in a single
document, it opens the door for complications in the future. In many cases,
it’s more cost-effective to have a lawyer create a contract template for your
side hustle than to have to hire one to piece together the terms from the parties’
communications and actions.

Minimum Contract Terms

In general, I don’t advise people to write their own
contracts (unless they have a law degree or sufficient contract experience),
but here are the basic terms I’d expect to find a side hustle contract:

Parties to the contract

Purpose of the contract

Payment terms, including what happens if the customer doesn’t pay (e.g. entrepreneurs who require ½ the fee up front and ½ upon completion)

Where and how problems will be resolved, including the venue, jurisdiction, and which state law will govern

If/how the parties can make changes to the contract

“Entire agreement” – all the terms in the contract are in the agreement

“Severability” – if the contract has any invalid terms then the parties will throw those out and the rest of the contract will remain

A provision that states if a party chooses not to use a right granted by the contract, they don’t waive their right to use it in the future

When I approach a new contract for a client, I try to
mentally walk through the customer’s journey and address the problems that the
client is trying to avoid and pre-plan how you want to deal with problems when
they occur.

Using a Lawyer for
your Side Hustle

If you’re going to have a side hustle, I recommend you sit
down with a lawyer for an hour. Tell them your goals and your budget. An
understanding lawyer will tell you about the legal issues you need to be aware
of, can do a quick trademark search to see if the name(s) you want to use are
already registered, and they can tell you want you can do yourself and what tasks
you should hire a lawyer to do for you.

A Few Final Thoughts

Thinking about what missteps I’ve seen companies inadvertently
commit, here are a few extra tidbits of information:

The terms of service for a website, online course, or mobile app are contracts. Write them or have them created with care.

Please don’t rip of another company’s terms of service and just change out the company and product names. That’s a recipe for trouble. You don’t want to represent that you do things that you don’t. I’ve also seen situations where the company’s terms of service says that it’s governed by New Jersey law and the company has no connection to that state. (The company they stole the terms from was in New Jersey.)

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When I was on one of the weekly calls with my mastermind group last week, one of my fellow Shankminders asked me to comment on a phenomenon amongst entrepreneurs – working on your side gig while at your full-time job.

Wait . . . what?! There are people out there sitting at their desks, and while they are supposed to be working for their employer, they are working on their side hustle? I was incredulous, but the members of my group knowingly nodded their heads.

I thought my head was going to explode. How can anyone think this is ok?

Am I the only person who read in their employment contract? What are you supposed to do on the first day of work besides read the company handbook? Even before I went to law school, I remember signing off on company policies that said employees couldn’t use company time or company resources to run a side business. At the time (2005ish), I assumed this policy primarily applied to people who might be realtors or the like on the weekend, but now I see how this applies to anyone who has a side business – including bloggers and other social influencers.

The notion that people are running their side gig during regular work hours raises a lot of red flags for me.

If you are an at-will employee, you can be fired for any reason, or no reason at all. Working on a side project when you’re supposed to be doing your work tasks seems like a good reason to fire you, especially if you’re neglecting your work duties to do it.

Employers can easily track what employees are doing at work with technology like keystroke trackers. You may be telling your employer a lot more than what websites you’re visiting – like passwords and your company’s trade secrets.

Your contract may have a provision that says anything you create during company time or using company resources is owned by your employer. If your contract has this provision, you may unwittingly forfeit your business to your employer, without any options for recourse.

Some employees have a provision in their contract that says that anything they create during the ten-year of their employment that is related to the work of their employer, is owned by the employer. This could apply to projects done even outside the office.

In general, I am an advocate of employer’s staying out to of employees’ business – personal or otherwise – and that comes with the obligation that employees keep non-work issues out of the office. I understand why it makes sense for someone to occasionally check social media at work, or like during their lunch break. And unless there is a security reason to prohibit it, employees should be allowed to have their phones at their desks to take phone calls or respond to text messages related to their families, permitted it doesn’t interfere with doing their jobs.

But work on a side gig while at the office? No no no. (At least, not without permission.) There are too many risks, the least of which is losing the job which is paying your bills while you’re getting your side hustle off the ground.

If you don’t know what the rules are at your office, go back and read them. Ignorance of the company rules, particularly the ones you signed off on, will not save you from discipline or worse. If you need help understanding how to work on your side gig while at your current employment, talk to a business attorney her knee or a resource that helps entrepreneurs in your community. If you want to see me pontificates more about this and related topics, you can contact me directly or connect with me on Twitter, Facebook, YouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

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Disclaimer

This website should only be used for informational purposes. It does not constitute legal advice, and it does not create an attorney-client relationship with anyone. If you need legal advice, please consult an attorney in your community.

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